BUSINESS LIVE: Inflation edges down to 6.7%

Investment firm M&G has revealed a jump in adjusted profits before tax from £298million to £390million in the six months to the end of June.

It said this: ‘Reflects a strong contribution from our Retail and Savings segment driven by an improved result from with-profits business and higher returns from excess assets in the shareholder annuity portfolio following the rise in interest rates.’

Construction group Galliford Try has reported good results aided by no longer having a housing arm, with profits up almost 20 per cent.

Andy Murphy, at investment research firm said Edison Group commented: ‘Galliford Try has posted a very encouraging set of results today, with profits rising by 18.4 per cent from £18.5m to £21.9m.

‘Galliford Try specialises in infrastructure and environmental projects, and shed its housebuilding arm in 2020. These choices have made Galliford Try’s business model uniquely resilient during what is a challenging period for the sector, and for the economy at large.

‘Infrastructure projects are counter-cyclical, and the drive to net zero has increased demand for environmental projects. What’s more, divestment from housebuilding has shielded the company from the decline of the residential property market, which began earlier this year.

‘As uncertainty over property markets abounds, Galliford Try finds itself well-positioned to take advantage of many of the long-term trends in British construction.’

The nudging down of CPI inflation in August to 6.7 per cent takes it to its lowest level since February last year.

The fall was also contrary to expectations, with economists and the Bank of England predicting a slight rise from 6.9 per cent in July to 7.1 per cent. That was expected to come from a sharp rise in petrol and diesel prices.

But while today’s figures will be well recieved, things don’t look so good for the next inflation reading, as the oil price climbs towards $100 and sends fuel costs rising further.

Dunelm revealed a dip in annual profits as rising costs and the slowdown in the property market took their toll.

The previously high-flying homeware retailer said it expected to return to growing its profits in the year ahead.

Dunelm revealed a 9.4 per cent drop in pre-tax profits to £192.7 million for the year to July 1.

Dunelm said consumer behaviour remains ‘unpredictable’, but forecast growth in sales and pre-tax profits over 2023-24.

The FTSE 100 was trading up 0.1 per cent or 7 points at 7,660.2 just after open this morning.

The ONS revealed at 7am that inflation had edged down to 6.7 per cent in August from 6.8 per cent in July.

A drop in the key core CPI figure from 6.9 per cent to 6.2 per cent will be seen as good news.

This takes some pressure off the Bank of England ahead of tomorrow’s base rate decision. The Bank is still widely expected to raise base rate by 0.25 percentage points to 5.5 per cent but this could be its last move upwards.

In the data the ONS said:

• The largest downward contributions to the monthly change in CPI annual rates came from food, where prices rose by less in August 2023 than a year ago, and accommodation services, where prices can be volatile and fell in August 2023.
• Rising prices for motor fuel led to the largest upward contribution to the change in the annual rates.
• Core CPI (excluding energy, food, alcohol and tobacco) rose by 6.2% in the 12 months to August 2023, down from 6.9% in July; the CPI goods annual rate rose slightly from 6.1% to 6.3%, while the CPI services annual rate slowed from 7.4% to 6.8%.